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Wall Street has spent years debating whether crypto belongs in client portfolios. Morgan Stanley has moved on to a more practical question: once clients own it, where should they put it to work?
In a newsletter aimed at financial advisors, John Keller of Morgan Stanley Investment Management compared three ways investors can stake crypto: through an exchange-traded product, through a centralized exchange, or through a self-custody wallet. His central point is that the venue an investor picks shapes how much of the staking reward they actually keep.
Three roads to the same yield
Staking means locking up a proof-of-stake token, such as Ethereum’s ether, to help secure its network. In return, holders earn rewards.
Keller’s comparison treats ownership structure as the deciding variable. Each route carries different implications for liquidity, exposure to risks such as validator slashing, and the share of rewards that reaches the investor’s pocket.
Slashing is the part that tends to make advisors nervous. A validator is the operator that runs the machinery behind staking, and if it breaks network rules or malfunctions, the protocol can penalize the funds staked through it.
That risk was the focus of the newsletter’s “Ask an Expert” segment. Waseem Salim, CEO of Valdora, laid out the due diligence practices that can help protect clients from validator penalties.
The comparison also lands at a convenient moment for Morgan Stanley’s own product shelf. The firm launched two staking-enabled exchange-traded products on July 28, 2026: the Morgan Stanley Ethereum Trust (MSSE) and the Morgan Stanley Solana Trust (MSOL).
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According to the research findings on the products, the Ethereum trust is designed to stake between 50% and 80% of its ETH holdings. The Solana trust can stake up to 100% of its SOL. Both are set up to pass approximately 95% of gross staking rewards to shareholders after provider fees are deducted.
The trusts carry a sponsor fee of 0.14%. Morgan Stanley, per the same findings, retains none of the staking income for itself.
Why the ETP route exists at all
The pitch behind products like MSSE and MSOL is simple. They give advisors a way to offer clients staking exposure without the clients holding the tokens directly or managing the mechanics themselves.
Running a self-custody wallet means safeguarding private keys and choosing validators personally. Staking through an exchange shifts that work to a third party, but it also puts assets on a platform the investor does not control. An ETP wraps the activity in a familiar brokerage format, the same one clients already use for stocks and bond funds.
The partial staking target on the Ethereum trust likely reflects a tradeoff between yield and flexibility. Tokens that are staked can take time to unlock, while a fund still needs to handle redemptions. Keeping a portion unstaked gives the trust room to breathe. The Solana trust’s ceiling of up to 100% points to a different approach for that network.
Morgan Stanley’s broader crypto product lineup has assets under management exceeding $14 billion across its suite, according to the research findings. The staking trusts add a yield layer on top of what had been plain price exposure.
What this means for advisors and investors
For investors, the key number to watch is the gap between gross and net rewards. Approximately 95% of gross rewards reaching shareholders, plus a 0.14% sponsor fee, gives advisors a concrete benchmark.
In an ETP, the investor relies on the fund’s selection of staking providers rather than their own. Slashing, liquidity constraints and network-level issues still exist underneath the wrapper. Salim’s emphasis on due diligence is a reminder that the convenience of a ticker symbol does not remove the need to understand what sits behind it.
